Companies are often under pressure to meet or beat Wall Street earnings projections in order to increase stock prices and also increase the value of stock options. Some resort to earnings management practices to artificially create desired results.

• Discuss how a company can manage earnings by changing its depreciation method. Is this an effective technique to manage earnings? Please explain your response to this question.
• Using a fictitious example and numbers you make up, describe how asset impairment losses could be used to manage earnings. How might this benefit the company? Please explain your response.